A 12-Step Program: Rehabilitate Your Relationship With Your Corporate Client by Phillip A. Pesek
E
veryone has heard of the 12-step program. The program is a set of guiding principles outlining a course of action to recover from a number of behavioral problems that have plagued mankind throughout the years. The 12-step program, if followed correctly, has been used by many to recover from alcohol abuse, overeating, smoking, gambling, spending money, and yes, even the dreaded cluttering. But nowhere will you find a program for the rehabilitation of the attorney who has disgruntled companies as clients. The attorney who is willing to solve any legal problem for his or her corporate client, no matter the cost. The attorney who will move mountains for his corporate client and make the most eloquent of legal arguments even if it means mobilizing every attorney in the firm just to win the case. Now, I know what you are thinking – is there a problem? Don’t they know that we, as legal representatives of our corporate clients, have their best interests at heart and would do nothing to ever harm the relationship? However, you must first admit that you have a problem before you can fix it and I am here to help shepherd you through a program that I have developed to rehabilitate your relationship with your corporate clients. Just between us, we’ll call it Outside Counsel’s Anonymous.1 As with any 12-step program, the program is only effective if you follow all 12 steps. Of course, you may wander off the path to rehabilitation from time to time, but know that your in-house corporate counselor is always available to help steer you back in the right direction. So, let’s get started on your rehabilitation! Step #1 – Recognize you are hopelessly addicted to the billable hour. I would not be writing this article if I felt that the relationship between outside counsel and their in-house counterparts was not strained. I am sure there are a lot of great relationships between these two types of lawyers, but you can’t tell me things don’t get a little tense when the legal bill comes in. That is because there is a philosophical difference between running a law firm and running a corporation. Law firms and corporate legal departments are organized differently and therefore, have different goals. The law firm consists of partners, associates and paralegals who bill at an hourly rate. The more hours that are billed and collected, the more money the firm makes. The more experience or expertise one has justifies a larger hourly rate, leading to more revenues. In most firms there are minimum hourly goals for each attorney each year. As a result, a young attorney who bills a lot of hours and collects on those hours has a great chance of making partner. As you can see, everything in the law firm revolves around the billable hour. On the other hand, a corporate legal department is considered a “cost” department and not a “profit” department; therefore, it is the goal of the company to minimize the legal costs it has to pay. A legal department budget is developed each year based upon the legal departmental expenses which include the salary and benefits of each attorney, paralegal and support staff, as well as overhead expenses. However, the biggest budget item is outside counsel fees. Each budget year, the in-house attorney has to estimate how much will be spent on outside attorneys. This is partially based on existing cases and projected future cases as well as trends based upon the previous years’ legal spend. Oftentimes, the in-house attorney is evaluated on how he/she performs with regard to the budget. Therefore, everything in a corporate legal department revolves around expense control. The disconnect between outside and in-house attorneys occurs because their respective business models are not compatible. An outside attorney is more interested in serving his or her client, no matter the cost, while an in-house attorney wants to obtain the best counsel at the best cost. An outside attorney wants to provide the best possible legal advice, even if it takes 20 hours to do it, while the in-house attorney is more interested 16
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